A SOCIO-ECONOMIC ASSESSMENT OF THE TUNA ...ipnlf.org/perch/resources/socio-economic-assessment-of...8.1 Benefits 34 8.2Challenges 34 8.3 Recommendations 36 9 Conclusion 38 10 References

A SOCIO-ECONOMIC ASSESSMENT OF THE TUNA FISHERIES IN THE MALDIVESThomas Hohne-SparborthContributing Authors:M.Shiham Adam & Adam Ziyad

Technical Report No. 5

I come from a long line of pole-and-line fishermen; it’s in my blood. For as long as I can

remember, I have never wanted to do anything else.

Abdulla Shaan, Maldivian fisherman

This report presents an analysis of the role of the pole-and-line fishery of the

Maldives as a social and economic policy, as opposed to a purely ecological

one. The study explores how government policies have helped shape the fishery

and have impacted on the vulnerability, adaptability and livelihood assets of the

local population. The sector is heavily exposed to trends on the world market,

and the economic potential of the fisheries remains underutilised. However, the

pole-and-line fishery has served to create an accessible and equitable form

of employment to a large, and otherwise isolated, part of the population, and

benefits from the fishery are spread through the economy through consumer

spending, saving and re-investment, including in education.

A SOCIO-ECONOMIC ASSESSMENT OF THE TUNA

FISHERIES IN THE MALDIVESThomas Hohne-Sparborth

Contributing authors:M.Shiham Adam & Adam Ziyad

The field work for this Technical Report was conducted in April-May 2013.

4

OrganisatiOnal PrOfiles

A socio-economic assessment of the tuna fisheries in the Maldives, IPNLF Technical Report 5

The International Pole & Line Foundation (IPNLF) works to develop, support and promote socially and environmentally respon-sible pole-and-line and hand-line tuna fisheries around the world. IPNLF’s ambition is to contribute to thriving coastal fisheries, including the people, communities, businesses and seas connected with them.

As a hub for sustainably-minded organisations, we use the influence of the market to forge change through practical fishery projects and stakeholder cooperation. IPNLF membership is open to organisations involved in the pole-and-line tuna supply chain, from fishing associations to suppliers, to retailers. Allied with our members, we demonstrate the value of pole-and-line tuna to consumers, policy-makers and throughout the supply chain.

We work across science, policy and the seafood sector, using an evidence-based, solutions-focused approach with guidance from our Scientific & Technical Advisory Committee and Board of Trustees.

IPNLF was officially registered in the United Kingdom in 2012 (Charity 1145586), with branch offices in London and the Mal-dives, and a staff presence in Indonesia.

Find out more about pole-and-line tuna, IPNLF and membership:

• Contact us at [email protected]

• Visit us online www.ipnlf.org and sign up to our newsletter• Connect with us on: • Twitter – Twitter.com/@IPNLF • Facebook - Facebook.com/InternationalPoleAndLineFoundation

J Sainsbury is a UK retailer, founded in 1869 and now operating 1106 stores and employing over 157,000 people. Sainsbury’s is the UK’s largest retailer of Marine Stewardship Council certified seafood.

Sainsbury’s commitment to sustainable fish sourcing is widely recognised, including their commitment to ensuring that by 2020, all their seafood will have been independently certified as sustainable. Sainsbury’s state that all of their operations are underpinned by a set of core values, including “sourcing with integrity”; “respect for our environment” and “making a positive difference to our community”. These values are reflected in the fact all of their canned tuna, including the tuna in their sand-wiches, sushi and ready meals, is caught using pole-and-line. You can read more about Sainsbury’s sustainable seafood policy on their mini-site Fish With Thought at www.sainsburys.co.uk.

International Pole & Line Foundation (IPNLF)

Sainsbury’s

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TABLE OF CONTENTS


Profiles 4

Table of Contents 5

1 Introduction 6

2 Methodology 8

2.1 Data collection 8

2.2 Theoretical framework 8

2.3 Report structure 9

3 Overview of the fishery sector 10

3.1 History 10

3.2 Target species 11

3.3 Value addition 12

3.4 Contribution to GDP 12

3.5 Foreign trade 13

3.6 Supply and use of fish products 16

4 Vulnerability context 17

4.1 Fish catch 17

4.2 Prices 19

4.3 Climate effects 21

5 Policies, institutions and processes 22

6 Livelihood strategies and outcomes 24

7 Socio-economic status of the fisheries 26

7.1 Natural capital 26

7.2 Social capita 26

7.3 Human capital 28

7.4 Physical capital 29

7.5 Financial capital 30

8 Discussion and recommendations 34

8.1 Benefits 34

8.2 Challenges 34

8.3 Recommendations 36

9 Conclusion 38

10 References 40

10.1 Published sources 40

10.2 Unpublished sources 42

Lead Author:Thomas Hö[email protected]

Production and Editorial design:Paul [email protected]

All image credits: International Pole & Line [email protected]

The report has been compiled by Thomas Höhne-Sparboth, London School of Economics and Political Science, UK, in collaboration with the International Pole & Line Foundation (IPNLF).

This document should be cited as:Horne-Sparboth, T., Adam, M. S., Ziyad, A. (2015) A socio-economic assess-ment of the tuna fisheries in the Mal-dives, IPNLF Technical Report 5. In-ternational Pole & Line Foundation, London 44 pages.

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1 INTRODUCTION


The Maldivian pole-and-line fishery is one of the largest coastal fisheries in the Indian Ocean, and is estimated to account for 18-20% of the total catch of skipjack tuna in this region (Adam, 2013b). The fishery has received con-siderable attention as a potential model for coastal states, owing to both its commercial success, and its adherence to ecological best-practices. Pole-and-line fishing has been promoted for its environmentally-friendly nature, owing to the low by-catch, which renders alternative methods such as purse-seining unsustainable (Greenpeace, 2009).

In 2012, the Maldivian skipjack tuna fishery achieved rec-ognition of its adherence to sound environmental manage-ment by successfully completing the process of certification by the Marine Stewardship Council (MSC). This certificate enables Maldivian skipjack tuna fish products such as canned tuna to carry the eco-label, whereby it has retained access to European markets and extracts a premium com-pared to other fisheries such as those of Indonesia, where pole-and-line fish catch may amount to as much as 100 kilotonne (kt), but where the lack of an established supply chain means only around 10% is marketed as such (Burton, 2013; Ali, 2013; Adam, 2013).

Certification is merely one step in the improved manage-ment of the fisheries, following on the heels of a range of oth-er reforms, such as the 2010 ban on shark fishing, and the country’s accession to full membership status of the Indian Ocean Tuna Commission (IOTC). However, in the on-going debate over the suitability of the Maldivian model, particu-larly in terms of its relevance to other coastal states, the role of the pole-and-line fishery as a social and economic policy bears further examination, and no studies have as of yet explicitly focused on this aspect as their main area of focus, although various works have touched on the subject (Linton and Shareef, 2011; Sinan and Rasheed, unpublished, 2012; Greenpeace, 2009).

This report provides an analysis of the pole-and-line fish-ery of the Maldives from the perspective of the fishermen that the sector employs, the communities of which they form

a part, and the society as a whole, within which the fishery plays a central role. The report seeks to answer the question of how the fisheries affect the vulnerability, adaptability and livelihood assets of the local population, particularly in the remote atolls. The study also identifies the various govern-ment policies that have helped to shape the fisheries into their present form, and how these policies have impact on these socio-economic dimensions.

The research builds on the existing literature regarding the fishery in the Maldives, and draws extensively on new material drawn from unpublished data and a series of in-terviews conducted in May and June 2013. While such a study has not been previously conducted for the Maldivian case, which is distinct in a number of regards, particularly as regards its promotion of pole-and-line fishery, a number of authors have previously explored the socio-economic im-pact of fisheries in other regions.

An early study of the fisheries in the South Pacific, for instance, explored the contrasts between traditional fishing practices and the competition from modern industrial-scale fishing activities, and explored issues related to the organi-sation and allocation of fishing grounds, and the distribution of profits (Doumenge, 1966). Several recent studies of the fisheries in Hawaii have also evaluated the economic con-tribution made by the sector, and have explored the impor-tance of social networks both between fishermen, and other societal groups (Barnes-Mauthe et al., 2012; Arita et al., 2011; Sharma et. al, 1999)2. More recently still, an increas-ing rate of tuna catch has inspired socio-economic stud-ies of tuna fisheries in Tanzania, which, though hampered by data limitations, found that artisanal fishing techniques had the potential to generate a significant income for fish-ers, was a significant contributor to exports, and generated some government revenue through licensing and registra-tion fees (Igulu, 2013).

In comparing socio-economic studies from other re-gions, a word of caution is appropriate. Studies such as the one attempted in this assessment are necessarily highly

1 INTRODUCTION1

1 This research was made possible through financial support by Sainsbury’s and the International Pole & Line Foundation (IPNLF). The author

would also like to express his appreciation for the assistance provided by the Marine Research Center, the Fisheries Management Agency, Horizon

Fisheries, and all interviewees whose views and experiences contributed to the report.

2 An extensive summary of earlier case studies of the Hawaiian case is also provided by Glazier (1999), detailing works that have contributed to the

development of estimation methods of economic contributions by fisheries, for instance through the use of I-O tables, the evaluation of specific

regulations and environmental policies, and the use of cost-earnings surveys.

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INTRODUCTION 1


context-specific. In the case of the Maldives, for instance, the reliance on pole-and-line fishing is distinct from cases re-viewed in previous studies. Care should thus be exercised in the application of findings to other cases The point is il-lustrated by a citation from the aforementioned report on fisheries in the South Pacific, which noted that “it is certain that the obstacles of language, custom, concepts of social

relationships, and organization of work are very difficult, if not impossible to overcome, at least over a very short period of time” to conclude that imposing a foreign fishing culture on traditional fisheries in places such as Polynesia would likely be a mistake (Doumenge, 1966). As a result, the Mal-dives may offer many fruitful lessons, but the challenges in transplanting its model ought not to be underestimated.

Maldivian pole-and-line fishermen at work - one man, one hook, one fish.

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2 METHODOLOGY


This report analyses the status of the fisheries and their so-cio-economic impact on the population of the Maldives using the Sustainable Livelihoods Framework, a tried-and-tested methodology propagated by the UK Department for Interna-tional Development (DFID) and the United Nations’ Food and Agriculture Organization (FAO). The approach distinguishes between the contexts in which people live, the assets that they have available to them, and the policies and institutions that affect their choices, the strategies that result from these (FAO, 2005). The visual representation of the framework, as shown in the figure below, highlights that each of these ele-ments form part of a broader livelihood system.

This type of analysis places “a heavy emphasis on un-derstanding the structures and processes that condi-

tion people’s access to assets and their choice of liveli-hood strategies” (DFID, 1999). The approach is applicable both to richer and poorer strata of the population, and rec-ognises that a variety of actors (ranging from the local com-munity, to the private sector and government) interact to shape outcomes, as part of a dynamic and on-going pro-cess.

The framework recognises five different types of “assets” that individuals and communities may rely upon to secure their livelihoods:

• Human capital relates to the ability of individuals to con-tribute, add value, and perform labour. Human capital may be increased or decreased as a result of health issues,

The fieldwork related to this report was carried out over a period of three weeks in May and June 2013. Interviewees included government officials in the Ministry of Fisheries and Agriculture (MOFA), the Ministry of Tourism, the Fisheries Management Agency (FMA), and the Marine Research Center (MRC). An extended fieldtrip was conducted to visit Horizon Fisheries, the largest private fishing company, and Kooddoo, the largest government-owned fishing company. Fishermen were interviewed at the fish purchase point at Horizon Fisher-ies in Maandhoo in Laamu atoll, at the harbour in Malé, and Vilingili island in Gaafu Alif atoll, and a town-hall meeting with

26 fishermen was also organised at Kolamaafushi island in this same atoll. Other interviews included councillors of Gan and Fonadhoo islands near Maandhoo, fish processors in Gan and Vilingili, and market traders in Malé.

Statistics were obtained primarily from the Fisheries Man-agement Agency, supplemented with public data collected and published by the Ministry of Planning and National De-velopment (MPND), and historical purchasing prices pro-vided by Horizon Fisheries. A variety of other published and unpublished sources are cited in this report, as mentioned in the references.

2.1 DATA COLLECTION

2.2 THEORETICAL FRAMEWORK

Source: DFID (1999)

Figure 1: Sustainable livelihoods framework

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METHODOLOGY 2


nutritional status, education, informal skills and training, experience, migration, and personal attributes such as mo-tivation and work ethics. Whereas traditional economics seeks to measure contributions by sectors such as health and education in terms of the expenditures on schools and medical facilities, human capital instead emphasises out-

puts such as educational achievement and mortality rates (Appleton and Teal, 2002).

• Natural capital represents the biological and geographi-cal resources that are available to people and communities in their immediate environment, such as access to agricul-tural land, biodiversity, and marine life. Natural capital may be either sustainable (such as in the case of a naturally-re-generating stock of fish producing a constant flow of new fish), or unsustainable (such as in the case of the extraction of mineral resources). In some contexts, ownership over natural resources may be a contentious issue, and may not be well-defined or cause for strife, for instance in the case of fishermen competing over shared fishing grounds.

• Physical capital includes all the accumulated technologi-cal and material investments that contribute to the goal of production, and may include infrastructure such as ports and roads, as well as factories and processing plants, or smaller-scale investments such as fishing vessels or fishing gear. Physical capital is often fixed, in the sense that it can-not be easily liquidated, and may carry associated costs such as depreciation, insurance, or risk of damage. Ow-ing to its tangible nature and quantifiable value, physical

This report first provides an overview of the fishery sector in terms of its history and present organisation to set the stage for the rest of the analysis. The report then considers factors such as the seasonality inherent in fish catch and trends related to stock status and the export markets to describe the vulnerabilities that the fishery sector, and those that it employs, are exposed to.

In accordance with the sustainable livelihoods frame-work, section 5 then proceeds to an explicit identification of the various institutions and policies that have helped shape the fisheries and determine the livelihood strategies avail-able. As discussed in section 6, the main outcome of these

capital may also be used as collateral to increase access to financial capital.

• Social capital represents the economic potential of com-munities of individuals, as enshrined in institutions, net-works, culture and laws. Social capital encapsulates fluid concepts such as knowledge, trust and security that may act as a catalyst for economic activity. Authors such as Putnam have highlighted how such “soft” assets as trust have a direct and measurable impact on economic per-formance (Putnam, 1993). For instance, the presence of a police force and a low level of corruption may encour-age businessmen to engage in business, without fear of theft or harassment, while well-developed connections be-tween communities can create opportunities for trade and commerce. Similarly, in fisheries, social networks may help reduce uncertainties faced by fishermen, and can consist of linkages both between fishermen, and with other indi-viduals, groups or institutions related to the sector (Barnes-Mauthe et al., 2012).

• Financial capital includes all monetary resources that an actor has access to, including wages, profits, pensions, savings, remittances, shares, bonds, loans, etc. Financial capital has no inherent value, but is instead measured in terms of the other forms of capital, such as the amount of labour (human capital) it represents, or the amount of goods (physical capital) it can buy. As such, it is an imme-diate but also incomplete means by which to measure an individual’s economic well-being.

policies has been to facilitate an outcome in which the fish-eries are organised in the form of small-scale privately-run enterprises that may be deemed economically inefficient, but from a socio-economic perspective provide a sustain-able and equitable form of income to a large and vulnerable population. In section 7, these socio-economic effects are explored in greater detail, on the basis of the five forms of capital described above.

The report concludes with a discussion of the findings and makes a number of recommendations to ensure and monitor, evaluate and optimise the socio-economic status of the fishery sector.

2.3 REPORT STRUCTURE

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3 OVERVIEW OF THE FISHERY SECTOR


Owing to the unique geography of the Maldives, it is un-surprising that historical evidence suggests that the fishery sector has been an important part of the local economy for much of the documented history of the islands. Tuna fishing is likely to date back at least to pre-Islamic times3. Further accounts by passing travellers and explorers have provided further insights into the nature of the fishery in these times, and suggest that the use of live bait pole-and-line fishing to catch skipjack tuna has been in common use for centuries (Anderson et al, 2012, citing Anderson et al, 1998; Anderson and Hafiz, 1996; Fitzler, 1935). Fish was caught using locally-built vessels using coconut rafts and locally grown timber, and boiled, smoked and sundried to produce a product known as Maldives fish (Ali, 2007).

For most of the history of the fisheries, fish catch was intended primarily for do-mestic consumption, although some dried fish products were exported around the region to markets such as Sri Lanka, Yemen and Suma-tra (Anderson et al, 2012). In 1971 the market in Sri Lanka largely col-lapsed, which led the government of the Maldives to issue an invitation for foreign investment in the fishery sector, in a bid to ensure continued ac-cess to foreign-exchange obtained from the sale of fish products. Spain, Thailand and Japan each signed agreements of varying periods of duration to send collector and freezing vessels to purchase the fish from local fishermen (Ali, 2007). The opportunities pre-sented by the demand for frozen fish represented a change in the character of the fisheries, from being focused primarily on domestic consumption to one increasingly geared towards exports.

In 1972, agreements were also concluded with Japa-nese partners for the construction of the Felivaru cannery, and the supply of 100 engines of 28 horsepower (Ali, 2007). By providing attractive credit schemes for the purchase and equipment of dhonis, the government, with the assistance of World Bank development programmes, was instrumental in modernising the fishing fleet. While pole-and-line fishery remained the dominant method of fishing, the mechanisa-tion of the fisheries led to larger vessels with higher capacity

(Anderson et al, 2012). Japanese long-liners have also ac-tively fished in Maldivian waters under a joint-venture pro-gramme, but the licences of foreign vessels were suspended in 2010 (Adam et al, 2012).

In 1982, the price of tuna in the world markets collapsed, and put the agreements with foreign vessels at risk. The gov-ernment responded by purchasing the Japanese collector vessels that had been servicing its fishermen, as well as the Felivaru cannery, and with the aid of a loan from Kuwait, ex-panded its fishing fleet by a further six collector vessels in 1983. In 1994 and 1995, further storage and processing facil-ities were established at Maandhoo and Kooddoo (Ali, 2007).

Through the State Trading Organisation and, later, a state-owned company (“MIFCO”), the gov-

ernment exercised a monopoly on freez-ing and canning (Linton and Shareef,

2011). As a result of these changes,

catch increased from 21,452Mt in 1966 to 124,109Mt in 1999. In 2000, the fisheries were partially privatised and the annual catch temporarily declined, but reached

184,158Mt in 2006, representing a compound annual growth rate of

5.5% from 1966 (FMA, 2013; Sinan, 2011). From the mid-1990s, exports as

well as re-exports through Thailand also in-creased rapidly, particularly to end markets such as

Japan and Europe, where awareness campaigns on sustain-ably-sourced fish have led to rapid increase in demand for pole-and-line fish.

From 2006 to 2009, fish catch declined for three consecu-tive years, and again in 2011. The reasons for this decline have not been determined conclusively, but possible explanations include changes in oceanic conditions, including changes in sea surface temperature, over-fishing of skipjack tuna in the rest of the Indian Ocean, and a decline in fishing effort (Adam, 2013a). A recovery in fish catch was reported in 2013 (Hori-zon Fisheries, 2013b). Trends in the export of fish products largely matched those of fish catch, experiencing a decline to 2009/2010, before making a partial recovery in 2011, when the value of exports of marine products amounted to US$120 million (MPND, 1982-2012).

3.1 HISTORY

3 The Maldives converted to Islam in AH 548 (AD1153-54)

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OVERVIEW OF THE FISHERY SECTOR 3


In 2012, skipjack, yellowfin and other tuna species ac-counted for 44%, 37% and 2% of total fish catch respec-tively (FMA, 2013). Other fish, especially reef fish, are mostly consumed domestically, particularly in the tourism sec-tor. The tuna fishing fleet is currently split roughly equally between vessels specialising in skipjack or yellowfin fishing (Burton, 2013a). The proportion of skipjack as a percentage of total tuna catch has declined in recent years, from a high of 75% in 2006. Although some vessels will target both species, skipjack fishing is concentrated in the southern part of the Maldives, while yellowfin fishery is primarily located in the centre (Sinan, 2011). The division is largely ex-plained by infrastructural differences, as the southern atolls lack easy access to Male’s international airport or deep-freezing facilities, which renders the export of yellowfin tuna from the south impractical.

Skipjack fishing experiences a high season from Septem-ber until April, after which fish catch drops significantly until August. The concentration of skipjack fisheries has shifted from the central atolls to the southern atolls, as a result of capacity expansions in terms of vessels and process-ing plants (Sinan, 2011). Skipjack is caught using around 80-150kg of live bait per fishing trip (Anderson, 1994), which are caught at night, these days often using high-voltage light to attract the fish. Skipjack is exported in fresh, frozen, chilled or canned form, or dried in the small-scale cottage industry for sale to Sri Lanka. Skipjack catch declined from 138,458Mt in 2006 to 57,652Mt in 2011, for indeterminate reasons, as discussed in section 4.1.

Yellowfin tuna was previously caught primarily by pole-and-line and using live bait (Sinan, 2011). In recent years, around 15-17% of pole-and-line catch is estimated to be yellowfin tuna, mainly in the form of juveniles of under 40cm in length, while handline fishing of mature and sub-adults

is now estimated to account for around half of total yellow-fin catch (Adam, 2013; Burton, 2103). Yellowfin fishing trips are much longer than skipjack trips, and can last up to two weeks. During this time, caught fish is stored in on-board ice boxes, which are refilled when selling the fish to processors. The price of yellowfin has increased in recent years, and – stimulated by declining skipjack catch – may have motivated skipjack vessels to switch to yellowfin fishery. Accordingly, catch has increased from 7,711Mt in 1991 to 15,247Mt in 2001 and 44,977 in 2012 (FMA, 2013).

The tuna fisheries are dependent on a migratory and straddling stock, which exposes the sector to vulnerabilities related to fishing trends and practices elsewhere in the In-dian Ocean, as discussed in greater detail in section 4.1.

Reef fish are the primary other species of fish caught com-mercially. Exploitation of reef fish started in the mid-1980s and by the 1990s groupers, sea-cucumbers and aquarium fish were actively targeted for exports (Adam et al, 1997, as cited by Sinan, 2011; Adam, 2013). Since then, growth in this sector has largely been driven by demand from the expanding tourism sector. As of 2013, the Ministry of Fish-eries and Agriculture is pursuing a policy of diversification, and is, for instance, preparing a grouper management plan that could create new commercial opportunities for the ex-ploitation of this fish (Shafeeu, 2013). Currently, exports are beginning to target regular reef fish such as jacks, breams, snappers and job fishes, contributing to growth in the reef fisheries.

Shark fishery was common in the Maldives for centu-ries, but in recognition of the greater economic benefits of maintaining eco-diversity and a healthy shark population for marine tourism purposes, shark fishers received financial assistance and training to facilitate their transition to other livelihoods, and shark fishing was formally banned in 2010.

3.2 TARGET SPECIES

Tuna, the day’s catch, waiting to be stored on ice.

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Fishing vessels are largely held privately by enterprising fish-ermen, or shore-based owners who may own vessels but do not participate in fishing trips and whose ownership is gen-erally limited to one, or at most two, boats. These vessels sell their fish to processing companies, either through shore-based facilities or collector vessels, or to the cottage indus-try, consisting of small-scale artisanal family businesses that smoke and dry the fish, or produce fish paste. Some of the processing companies own and operate their own vessels (Linton and Shareef, 2011), but the majority of the vessels remain privately operated. The larger processing companies appear reluctant to invest in their own vessels, as such a step is deemed politically sensitive, representing an upset of es-tablished practice (Horizon interview).

In 2000, as part of structural reforms, MIFCO was split up into (1) Kooddoo Fisheries company, which exports frozen fish to Thailand; (2) the Felivaru canning facility in the north; and (3) the KOG Fresh Fish plant. Of the three, only Kood-doo, located towards the south of the Maldives, appears to be managing well, and remains the largest exporter of frozen tuna to Thailand. The company is planning an expansion in the southern atolls through a new freezing facility. The Felivaru facility has large surplus capacity, but struggles with a ne-glected infrastructure, poor cash-flow and access to fish, and may be only marginally profitable, if not running at a loss.

A number of private companies have also entered the market since 2000, assigned to operate in specific zones of the Maldives. Under MSC certification, any private company that is a member of the Maldives Seafood Processors and Exporters Association (MSPEA) is allowed to export MSC-certified skipjack tuna products. The largest private company, Horizon Fisheries, was founded in 2003 and expanded the

In dollar terms, output from the fisheries sector has increased since the 1980s and peaked in 2006, after which the decline in fish catch had a detrimental impact on the primary fish-ery industry, which was not offset by a rise in prices. During the period from 2006, however, production in fish processing continued to increase, which is believed to have been the re-sult of the privatisation in 2000 and the progressive entry of new private processing and exporting companies, increased demand for export products from Europe, and the increase in the price of fish in the world markets. Output generated in

storage facilities originally owned by MIFCO into a canning and freezing complex. The company mainly processes skip-jack tuna intended for the European market and has large surplus capacity, resulting in high operational costs. It is also developing a cold storage facility in the north, where a third processing plant has been constructed by a separate com-pany that could become a competitor with Felivaru for ac-cess to fish, if it in fact becomes operational (Adam, 2013b). Most of the other private companies, such as Ensis and Cy-prea Marine Foods are focused on the yellowfin industry, and are an important source of finance for fishermen (Linton and Shareef, 2011).

Both processing companies and the artisanal industry purchase fish directly from fishermen, cash-in-hand, but pro-cessing companies also provide fuel and ice, which provides them with an important advantage. Fishermen are mobile, but will generally sell to the one or two companies that oper-ate in their area, mostly based on considerations of conve-nience, as prices are generally the same between the com-panies. Fish is then sold fresh to export markets, processed into canned tuna, or frozen for shipment to overseas canners, particularly in Thailand.

A smaller amount of fish is sold to the cottage industry, which in recent years has suffered from the rising costs of the raw fish, and falling demand from markets such as Sri Lanka. Moreover, competition from the large fish processors limits the access to fish by artisanal producers, which is largely re-stricted to smaller fish that do not meet the weight-limits of the companies. As of 2013, artisanal producers reported to be struggling to make a profit, but with limited skills, local op-portunities and credit facilities, alternative livelihoods are not readily available (Höhne-Sparborth, 2013b).

the secondary fish processing sector peaked in 2008, before falling for three consecutive years, with a partial recovery in 2012. In 2012, the total output from the fishery sector was approximately US$69 million.

In percentage terms, however, the significance of the fish-ery industry to Maldivian GDP has declined from 12-18% in the 1980s, to 6.4% in 2003, and to just 3.5% in 2012. The de-cline is mostly accounted for by rapid growth from the tertiary sector, including tourism, where the compound growth rate over the period from 1984 to 2010 reached 8.1% per year, as

3.3 VALUE ADDITION

3.4 CONTRIBUTION TO GROSS DOMESTIC PRODUCT (GDP)

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well as sectors complementary to tourism, such as transpor-tation, communication and construction (Mohamed, 2013).

While fish catch partially recovered in 2012 and 2013, fish stocks place a natural limit on the volume of output in the primary sector. In the manufacturing sector, the dependency on imported raw materials results in high costs and adverse-ly affects the growth prospects of the industry4. As predict-ed by the IMF, “the fisheries sector is expected to continue to perform poorly due to exogenous factors affecting the fish population” (IMF, 2011). The Ministry of Planning and National Development (1982-2012) projects a partial recov-ery in 2012 and 2013, but forecasts medium-term growth in the manufacturing sector as a whole of only 1.6%py and

2.6%py in 2014 and 2015, respectively. It forecasts nega-tive growth in value terms of -1.4% and -0.4% in the primary fisheries industry for these years, compared to growth of 4.6% and 3.8% in the tertiary sector (MPND, 1982-2012).

It should also be noted that the indirect contribution of the fisheries to GDP may be significant, by stimulating related in-dustries, such as various manufacturing sectors, boat-build-ing, trading enterprises, transport, and service industries. In the case of Hawaii, for instance, it has been estimated that an increase in demand for longline tuna products of $1 would result a total economic impact of $2.59 (Arita et al., 2011). A specific estimate for the Maldives is not available, but is likely to be of a similar order.

4 Over 62% of the products traded in the economy have an imported content of at least 50%, contributing to an exchange rate pass-through of

79%, implying that a 10% change in the exchange rate would result in a 7.9% change in consumer prices (IMF, 2011).

Figure 2: Fishery contribution to GDP, 1984-2012 (Constant US$2012 million)

Figure 3: Fishery contribution to GDP, 1984-2012 (percentage of total GDP)

Notes: Data from editions of the MPND statistical yearbook from before 2011 provide a higher estimate of the size of the fishery sectors. A data

adjustment appears to have occurred when the MPND adopted 2003 as the new base year. Figures from 1984-2002 have been estimated in an

attempt to incorporate this adjustment.

Source: MPND (1982-2013) Source: MPND (1982-2013)

14



While the fisheries constitute a declining portion of GDP, ex-ports of marine products have accounted for nearly all of the country’s exports. In 2011, marine products accounted for 97% of exports, and this percentage has changed little in the last twenty years, if re-exports of imported material are excluded. The remainder of the exports from the Maldives primarily consist of waste material.

Since 1991, the value of exports of dried tuna, produced by the small-scale cottage industry, has remained fairly con-stant, suggesting that there has been little growth or invest-ment in this sector. Conversely, the volume of fish and fresh or chilled tuna exports increased 129% from 2000 to 2011, while prices of these products increased by 220%, to con-tribute to a large increase in the total value of the exports of these products. A further increase was recorded in 2012. Canned fish has declined from US$24 million in 1991, to US$14 million in 2000 and US$6 million in 2010, most likely as the result of a decline in fish catch, combined with eco-nomic inefficiencies and the poor performance of the Feli-varu cannery. In 2012, exports of canned fish are estimated

to have made a partial recovery to US$14 million. Fishery exports also provide the Maldives with an important means of access to foreign exchange, alongside tourism.

The tourism industry brought in 931,333 tourists in 2011, staying an average of 7 days, and was worth an estimated US$579 million in 2011. However, out of 101 resorts, 41 were managed by foreign partners, and a further 17 through joint venture arrangements (MPND). Much of the invest-ment is also financed by foreign banks (Jamal, 2013). It is unclear what portion of revenue (much of it paid by credit card rather than cash) remains in the Maldives, so that dol-lars continue to remain in high demand by local companies that require foreign currency to finance their imports. The imbalance in supply and demand of foreign currency has given birth to a black market exchange, where dollars are traded at a premium of around 10-20%.5 This premium cre-ates a further obstacle to value addition, as greater financial gains may be derived from exporting intermediate products to a foreign market, than selling the product domestically to be further processed.

3.5 FOREIGN TRADE

5 In May 2013, the official exchange rate was 15.15MVR per dollar, whereas black market prices were in the range of 17-18MVR per dollar

Source: MPND (1982-2012)

Figure 4: Exports by commodity, 1991-2012 (constant US$2012 million)

Notes: The sudden drop-off in the category of other products relates largely to trans-shipment of apparel and clothing to the USA, which appear

to have ceased in 2005.

15



Thailand and the European Union account for the ma-jority of exports. In 2011, Europe accounted for 46% of exports. When taking into account re-exports of Maldiv-ian fish products processed in Thailand, the percentage is significantly greater. Burton (2013b) estimates that 90% of the fish exports from the Maldives to Thailand are canned and exported to the European Union, while much of the balance is accounted for by Canada and Australia. Trade has been facilitated by the status of the Maldives as a Least Developed Country (LDC), a classification which pro-vides duty-free access to the European market. In January 2011, however, the Maldives graduated from LDC status to become a developing country. A two-year transition pe-riod is set to end by the end of 2013. Although a one year extension has been applied for (Shafeeu, 2013), a 20.5% import duty will be imposed on all tuna imports from the Maldives into the European Union by 2015 at the latest.6

6 The equivalent rate for imports from Thailand is 24%. The lower rate of 20.5% is the rate applied to countries, including the Maldives that qualify

for reduced rate under the Generalised System of Preferences (GSP).


Figure 5: Exports by destination, 1991-2012 (constant US$2012 million)

Notes: The sudden drop-off in the category of other products relates largely to trans-shipment of apparel and clothing to the USA, which appear

to have ceased in 2005.

Live bait is scattered onto the sea to attract tuna, exports of

which account for nearly all of the Maldives’ exports.

16



In another case study, specific to the Hawaiian fisheries, it has been noted that another contribution of fishery as a sec-tor is in its provision of inputs to other industries in the econ-omy, mainly in terms of the sale of fish for end-consumption, and as an input for further processing (Sharma et al, 1999).

In 2003, the only year for which supply and use data is available for the Maldives, the total value of unprocessed fish (excluding fish consumed by processing industries) amounted to US$32 million, while the total value of pro-cessed fish amounted to US$64 million. A total of US$10 million of products were imported.

Exports accounted for US$77 million, consumption by tourism-related industries in restaurants, hotels and resorts accounted for US$10 million, while domestic household consumption amounted by US$14 million. The discrep-ancy between supply and use is accounted for by margins and inventories by retailers, wholesalers and processing companies. Household consumption of US$14 million corresponds to per capita consumption of around US$49, which at 2003 prices amounted to approximately 185 ki-los of skipjack tuna. Sinan (2011) reports estimated

per capita fish consumption of 181kg.7 The FAO estimates that in 2009 fish protein accounted for approxi-mately 44% of animal protein (FAO, 2013), highlighting an important nutritional role of the fisheries within the economy.

7 Note that these figures relate to total fish consumption, including species other than tuna. Domestic consumption of skipjack tuna is estimated

to be around one third of total catch (Burton, 2013b).


Figure 6: Use and supply of processed and unprocessed fish products, 2003 (US$ million)

3.6 SUPPLY AND USE OF FISH PRODUCTS

The fishermen load their catch into the hold, to store it on ice,

keeping the tuna fresh until landed.

17

VULNERABILITY CONTEXT 4


Source: FMA (2013)

Figure 7: Monthly total fish catch, January 1991 - December 2011 (metric tonnes)

The vulnerability context relates to the insecurity inherent in an individual’s environment, which may affect a person’s livelihood through seasonality, trends and shocks, and are generally outside of their control, at least in the short to me-

Together with prices, revenue in the fisheries is a function of fish catch, which has shown considerable fluctuation over the last 20 years. Fish catch itself is influenced by a number of factors, including trends in the local fish population, the amount of capacity available within the industry, the effort devoted to fish catch, the catch rate per unit effort, as well as seasonal variations.

As shown in Figure 7, skipjack, yellowfin, other tuna spe-cies as well as other fish catch increased significantly from 1991 to 2006, which can in large part be explained by invest-ments in capacity and efficiency. Adam and Kolody (2011) provide an overview of a number of the changes in the aver-age catchability of fishing vessels since the 1970s, citing an increase in the size and power and storage capacity of the vessels, improved electronics, the introduction of a network of around 45 anchored Fish Aggregating Devices (FADs), im-

dium term (DFID, 2000). In the Maldives, the fisheries are particularly exposed to such vulnerabilities, owing to their dependence on natural resources, many of which form part of a larger eco-system.

provements in bait catching techniques through the use of floodlights, and the use of collector vessels serving to dra-matically increase efficiency of the vessels and to increase the operating range of the fishing fleet.

From 2006 onwards, however, total fish catch has declined owing to a decline in skipjack catch (yellowfin catch actually increased 55% since 2006). The cause of this decline has been suggested to be “a combination of the over-exploitation and oceanographic changes in the area”, while there is also evidence that “catch rates of the skipjack [have] also been declining” and that “average sizes of skipjack in the Maldives [have] also decreased in the recent years” (Adam et al, 2012, also citing Adam, 2010 and Adam et al, 2011).

The cause of the decline is difficult to determine conclu-sively, in part because a rigorous stock assessment was not carried out until 2011, and the species is highly migratory,

4.1 FISH CATCH

4 VULNERABILITY CONTEXT

18



subjecting it to influences elsewhere in the Indian Ocean. It has been noted that skipjack tuna is relatively difficult to overfish, as the species’ growth rate, reproductive potential and overall population size allows it to withstand high levels of fishing pressure (Anderson et al, 2012). However, the Maldives is located in a zone with a high affinity for tuna, owing to the productive waters around its atolls and the network of FADs, so that “a decline in the real abundance of tuna may not be observed until stock is seriously depleted” (Adam, 2013b).

Other ecological explanations that have been suggest-ed include a rise in the ocean temperatures affecting the behaviour of the fish, and the damage to local reefs caused by the 2004 tsunami, affecting the population of smaller fish, although surveys have shown that this lack of live bait ranks low as a reason reported by fishermen for not going fishing (Adam, 2013).

An approximate breakdown of the causes of the decline in fish catch since 2006 is shown in Table 1. From 2006 to 2011, fish catch per unit effort (defined as one day of fish-ing) declined 18.6% from 1,024kg to 834kg for mechanised “masdhonis” (boats). During this same period, the aver-age number of vessels engaged in fishing also declined by

16.6%, and the average number of trips per vessel declined by 5.5%.

Part of the decline in fishing trips per vessel is likely related to the decline in fish catch per unit effort in skipjack fishing, since below a certain expected rate of return, it may not be economically viable for a vessel to go fishing. In addition to a decrease is skipjack catchability, the decrease in catch per unit effort is also attributed to the increase in the proportion of yellowfin fishing, as the amount of the much larger and more valuable yellowfin fish caught on any single fishing trip is usually much less than an average day’s skipjack catch, in tonnage terms (Höhne-Sparborth, 2013; Burton, 2013b).

Aside from long-term trends owing to changes in fishing methods, fish catch in the Maldives is also highly seasonal, as shown in Figure 8, as a result of the migratory nature of tuna and weather patterns. Fish catch is, on average, low-est in the months from May to July, after which fish catch increases to peak during the months from November to Jan-uary. Seasonal variations such as these contribute to the vulnerability in the sector, by creating significant fluctuations in revenue and increasing the degree of insecurity as regards expected income.

Source: FMA (2013), author’s calculations

Notes: Ratio of each month calculated as that month’s fish catch over the 12 month moving average. Graph shows average values for each month

over the years 1992 to 2010.

Figure 8: Seasonal variations in total fish catch, 1992-2010 (annual moving average = 100)

19



As with fish catch, prices for tuna have shown considerable variation over the last ten years, owing both to long-term global and regional trends, and short-term seasonal fluctua-tions and supply shocks, all of which impact on the livelihoods of those engaged in the fisheries.

In the last 10 years, prices of tuna have increased in both the Maldivian and world markets, owing to a slow growth in supply, coupled with a rapid increase in demand, from mar-kets such as the European Union and Japan. As the FAO has noted, supply in the fishing industry is naturally uncertain, but in the case of tuna demand is perhaps more volatile than in other markets:

“Market demand for tuna is strongly affected by the avail-

ability of many substitute products and other external ele-

ments such as health and safety concerns, preferences for

low-fat and high-protein foods, environmental concerns,

trade barriers, exchange rates, and/or the global economy.”

(FAO, 2010)

Regional prices for fish, particularly for cannery grade skip-jack, “once converted into dollars, are very closely related to the world prices in dollars” (FAO, 2010).

Owing to its processing industry, Thailand acts as the price-setting market for much of the world, and the Indian Ocean

in particular, and prices in the Maldives follow the trends in this market. However, Maldivian fish commands a significant premium compared to purse seined fish delivered to Bang-kok, which has recently been in the range of US$250/t (Bur-ton, 2013b). Kooddoo, the largest purchaser of fish, acts as the leader in the domestic market, and determines the price level and, while fishermen depend on exporters for access

4.2 PRICES

Table 1: Fish catch, fishing trips and number of vessels engaged, 2006-2011

Figure 9: Domestic price of skipjack tuna, 2003-2013 (US$/kg)

Source: Horizon Fisheries (2013)

20



Although revenue has increased as a result of increased fish catch and higher prices, the cost of living has also increased, at an average rate of inflation of 4.2%py since 1995. Due to the small size of the economy and its lack of natural re-sources, the Maldives is highly dependent on imports (World Bank, 2006). Consequently, changes in the exchange rate or in the cost of fuel have a high impact on consumer prices in the Maldives.

No category of consumer products has increased as much as fish products, prices having risen over 342% since 1995. Fish products are weighted at only 4.6% in the consumer price basket (MPND, 2012), but are estimated to account for 44% of domestic protein consumption (FAO, 2013). The rapid rise in the cost of living and particularly that of fish products is a cause of concern, particularly for those parts of the population whose incomes are not tied to the export market or inflation-adjusted wages.

to the world market, so that domestic prices need not nec-essarily follow global trends, political pressure contributes to maintaining a degree of parity between world and local prices (Ali, 2013). Although purchasing prices have always exceeded the base level, the government has not yet taken the step to abolish base prices for tuna (Sinan, 2011).

As with fish catch, fish prices exhibit a degree of seasonality, as the result of seasonal trends in supply and demand on the world market. Since supply trends in the Maldives are driven by local ecological and meteorological variations that may vary from global trends, seasonality in fish prices and fish catch do not wholly coincide. Multiplication of the two indices for the seasonality of fish catch and fish prices provides an estimate of the implied seasonal variation in total revenue. Since fisher-men’s income is tied to total revenue, Figure 10 shows that income is – on average – lowest in the first half of the year and in an average year might vary around 30% between months.


over the years 1992 to 2010.


Figure 11. Consumer price indices (1995 = 100)


over the years 1992 to 2010.Source: Horizon Fisheries, author’s calculations

Figure 10: Seasonal variations in fish prices and revenue, 2004-2011 (annual moving average = 100)

21



The Maldives does not represent an isolated ecosystem, and is directly affected by climatological changes in the rest of the Indian Ocean, and developments in the world’s climate as a whole. In 2009, President Mohamed Nasheed made headlines by organising a headline-grabbing underwater cabinet meeting to call attention to rising sea levels threatening the existence of the islands, although his successor, Mohamed Waheed Has-san Manik, played down such fears (Daily Mail, 2009; Haveeru, 2012).

As regards the fisheries, a more immediate threat may pertain to changes in the temperature of the ocean, affect-ing oceanic flows and the availability of nutrients. Pole-and-line fishery may be particularly susceptible to these changes, as the method targets fish swimming close to the sur-face, while rising temperatures are believed to result in fish swimming deeper in search of cooler temperatures (Adam, 2013). A study exploring exposure of the world’s fisheries to such effects found that the Maldives is located in a zone where fish catch might decline up to 50% to 2055, com -pared to 2005 (Huelsenbeck, 2012). In combina-tion with the atolls’ dependence on the fishery sector and the Republic’s lack of adaptive capacity, the study found the Maldives to be the most vulnerable country in terms

of food security, as a result of the impact of climate change on fishery.

In addition to the long-term effects of climate change, the exposed and low-lying nature of the islands also renders the Maldives vulnerable to environmental disasters such as the 2004 tsunami. The tsunami resulted in damage to 69 out of 199 inhabited islands, and the displacement of around 13,000 people. In the fisheries, damage was estimated at around US$25 million, including the loss of 120 vessels, partial dam-age to an additional 50 vessels, damage to boat equipment and ocean cages, and the loss of equipment by 347 (mainly small-scale) fish processors. The tsunami was found to have caused only minor damage to the country’s coral reefs (UNEP, 2005).

While warning systems have improved since 2004, the Mal-dives remains vulnerable to disasters such as these, and the possibility of a repetition of such events must be taken into ac-count as part of the overall context of vulnerability in the country, and the fisheries in particular. Following the tsunami, the sector recovered quickly, in part because damage was restricted by the fact that most fishing vessels were at sea at the time of the tsunami and survived mostly unharmed. The sector received around US$2.35 million in aid (Linton and Shareef, 2011).

4.3 CLIMATE EFFECTS

Source: Adapted from Cheung et al (2010), reprinted with permission

Figure 12. Predicted change in catch potential in Exclusive Economic zone (EEz) by 2055

Change in catch potential(% relative to 2005)

<-50

-31 to -15

-6 to -5

16-30

51-100

-50 to -30

-16 to -5

6 - 15

31-50

>100

22

5 POLICIES, INSTITUTIONS AND PROCESSES


The management of the fisheries in the Maldives has been described as “mostly limited to bans, prohibitions, setting up quotas, licensing schemes, and levying fees” (Adam, 2004). While management of the fisheries has improved, in part motivated by MSC Certification and IOTC membership, the fisheries still lack an integrated long-term development plan, and most policies appear to be adopted on an ad hoc basis. However, while the fishery sector has emerged from tradi-tional roots, government policy has played an active role in shaping, maintaining and transforming aspects of the fishery. It is these policies that have defined the modern appearance and organisation of the sector, and that have ultimately de-termined the extent and distribution of the socio-economic benefits derived from the sector.

• Monitoring, research and enforcement: The Fisheries Management Agency (FMA) is responsible for monitoring and data-collection, while the Marine Research Centre (MRC) is responsible for scientific research related to the country’s marine resources. Policy is coordinated by the Ministry of Fishery and Agriculture (MOFA). Local moni-toring and data collection is carried out by island collec-tion offices, although this system was being phased out as of 2013 in favour of direct monitoring by FMA staff. Enforcement is also conducted with the assistance of the coast guard and the Maldives Police Service, which is responsible for patrolling the seas against the incursion of foreign fishing vessels.8 A vessel monitoring system (VMS) is currently being introduced, and an on-board observer scheme remains in the pipeline (Sinan, 2013; Adam, 2013b).

• Licensing scheme: The most significant policy adopted by the government is its commitment to the traditional pole-and-line method of fishing, operated by domestic fishermen. Restrictions on other forms of commercial fishing is implemented by means of a licensing system, through which the Maldives does not issue licenses to foreign-flagged vessels, nor to purse-seining vessels

(IOTC, 2011). Foreign longliners were previously allowed to operate in Maldivian waters, but renewal of these li-censes was suspended as of May 2010. The govern-ment planned to develop a local fleet to target yellowfin and big-eye tuna of up to 30 vessels by 2012, but for most of 2012 only two vessels were operated in the Ex-clusive Economic Zone (EEZ). Licenses are renewed an-nually against the payment of a nominal fee (Sinan, 2011; Adam et al, 2012).

• Foreign investment: The suspension of licenses of for-eign vessels more generally reflects a reluctant approach towards foreign investment in the fisheries as a whole. The fisheries, as opposed to tourism, are seen as a primordi-ally traditional Maldivian activity, and foreign ownership of companies in the sector is deemed politically sensitive and is actively opposed by local fishermen, which contrib-uted to the suspension of the foreign long-line programme in 2009 (Sinan, 2013; Adam, 2013). Consequently, while foreign investment and financing played an essential role in the modernisation of the fisheries from the 1970s on-wards, as of 2013 all fish processors and exporters were fully Maldivian-owned, and the government does not plan to issue any new licenses to foreign vessels.9

• Privatisation: Another important policy, privatisation, was originally mandated as part of assistance programmes ran by the World Bank, and resulted in the split-up of MIFCO in 2000, and the auctioning of some of its assets. Even before the break-up of MIFCO, its various facilities were not equally profitable, and pressure from the local population in Kooddoo, where the most profitable part of the enterprise was located, may have contributed to the break-up (Kooddoo Fisheries, 2013). In 2006, the World Bank noted that the main operations of MIFCO, “will be further privatized over time, although the schedule and approach have not been finalized” and little progress ap-pears to have been made in terms of outlining a strategy for the future of these companies (World Bank, 2006).

5 POLICIES, INSTITUTIONS AND PROCESSES

8 Sinan (2011) reports that local fishers suspect that large amount of foreign unlicensed vessels operate in the Maldivian EEZ. There have been sev-

eral cases of unlicensed vessels being caught by local fishers and the Coast Guard operated by the Maldives National Defence Force (MNDF).

9 One area where foreign investment may be welcomed is in aquaculture, which is recognised by the Ministry as a sector that would fit in with its

policy of diversification and in which there is little domestic expertise. An American company, Blu Bridge is in the process of starting a pilot project,

but progress has been hampered by changes in governance and the lack of continuity in policy agendas (Russ, 2013).

23

POLICIES, INSTITUTIONS AND PROCESSES 5


Privatisation and the break-up of MIFCO is not considered an unqualified success (Shafeeu, 2013), but political and financial interests, coupled with a high turn-over rate in the government and the boards of the three daughter compa-nies has made strategizing in the fisheries a sensitive affair.

• MSC certification and IOTC membership: In more re-cent years, an important part of MOFA’s policy has been its commitment to MSC Certification and IOTC member-ship. The Maldives entered the MSC assessment process in 2009, and received the eco-label in 2012. Concurrently, the Maldives became a full member of the Indian Ocean Tuna Com-mission (IOTC) in 2011, and played an instrumental role in passing a reso-lution on fishing targets and refer-ence points in 2012 (MSC, 2012). Initially, pressure from environmen-tal groups such as Greenpeace, the International Pole & Line Foun-dation (IPNLF), and European retail-ers helped initiate the process, but these partners confirm that the Maldives soon acquired ownership of the process, in recognition of the economic potential of a certified fishery (Ali, 2013; Burton, 2013a; Shafeeu, 2013). Certi-fication has required the improvement of monitoring and management practices, but as the fisheries were already based on largely sustainable practices and a licensing sys-tem was already in place, the practices of fishermen and their vessels have not significantly been affected. As such, the primary effect of the MSC label and IOTC membership has been to maintain access to EU markets, at premium prices (Shafeeu, 2013).

• Revenue and subsidies: In 2011, total government revenue excluding grants amounted to US$584 million. The government does not explicitly report the amount of

revenue generated by the fisheries, but an analysis of the government’s balance sheet suggests the figure may be as a low US$2 million in 2011.10 The Minister for Eco-nomic Development confirms that the sector “brings in little revenue to the treasury”. In terms of expenditure, in 2012 expenditure of the fisheries stood at 55.5 million Maldivian Rufiyaa (MVR) (US$3.64 million) or 0.3% of total govern-ment expenditure (Mohamed, 2013). In 2013, the govern-ment allocated US$6.5 million in fuel subsidies to fisher-men (Powell, 2012). Given the earnings of fishermen and

the overall profitability of fishing as a livelihood, fuel subsidies do not appear to be an economic im-

perative. Instead, the status of the fishery as a net recipient of government funds

more likely reflects the sector’s status as a socially and politically impor-tant one.

• Diversification and value addi-tion: As a result of the graduation of the

Maldives from LDC status, exports to Eu-rope are at risk of a steep decline or signifi-

cant upheaval. Interview results suggest that MOFA is aware of the issue and remains “very

worried” (Shafeeu, 2013). In response, MOFA intends to promote a policy of product and market diversification, although alternatives are not readily apparent, particular-ly in terms of other markets that would be willing to pay a premium for sustainably-sourced fish that represents the main competitive advantage of the Maldives. While some initiatives are underway (such as the development of a grouper management plan that could prepare the way for active fishery or aquaculture of this species), a clear strategy or timeline to address these issues is not avail-able, nor is it clear to what extent these could absorb the impact the imposition of a European export duty is likely to have.

10 In the years from 1994, revenue from MIFCO, the state-owned fisheries company, has only been reported three times: US$425,000 in 1994

and 1998, and US$140,000 in 2008. Revenue from import duties amounted to US$172 million in 2011, but in 2003 (the only year for which data

is available and when fish catch exceeded that of 2011) the fisheries accounted for only 0.8% of imports of good, and are estimated to have ac-

counted for approximately US$1.3 million in 2011. Business profit, goods and services tax, and revenue from other sources such as licences and

fees amounted to US$15 million in 2011, but as the fisheries are not estimated to have exceeded 3.5% of total GDP, part of which is accounted for

by informal and government enterprises, revenue from these sources is not estimated to have exceeded US$525,000, resulting in total estimated

revenues of under US$2 million in 2011 (author’s estimates).

24

6 LIVELIHOOD STRATEGIES AND OUTCOMES


11 A study based on a fuel consumption survey in 2009 found that purse seining vessels had a fuel use intensity (FUI) of 368l/t, compared to 1,485l/t for

pole-and-line vessels (Tyedmers and Parker, 2012). The data on pole-and-line fishing was based exclusively on albacore and bigeye tuna fishing in the

Atlantic Ocean, and is unlikely to be representative of actual fuel use in the Maldivian skipjack industry. During interviews, none of the vessel captains

reported using more than 1,000 liters per fishing day, which at 137,784 fishing trips by mechanised dhonis catching 114,900mt in 2011 would imply a

maximum FUI of 1,200l/t. Self-reported catch figures and fuel consumption figures suggested actual FUI was likely to be significantly lower and prob-

ably below 400l/t (Höhne-Sparborth, 2013a), although a larger-scale survey would be required to verify such an estimate conclusively.

Tyedmers and Parker (2012) cite early studies on hook and line skipjack fishery in the Pacific, which found FUIs of 1,163l/t and 1,483l/t in 1975 and

1980 respectively (Nomura, 1980; Watanabe and Okubo, 1989). Owing to the use of radio, GPS and floodlights, as well as the use of larger and more

powerful vessels, fishing efficiency has improved since the 1980s (as reflected in the increased fish catch). Whereas in 1980 mechanised masdhonis

had an average catch rate of just 326kg per fishing day, this figure had increased to 1,024kg in 2006, before declining to 834kg in 2011. It seems likely

that these improvements in catch rate would have contributed to a decline in FUI. Indeed, a study by Monintja & Mathews (2000) found that FUI had

declined from 1,007l/t in the period from 1980-1984 to 535l/t in 1985-1989, and although more recent studies on pole-and-line FUI are not available,

it does not seem unlikely that this trend towards greater efficiency would have continued in the 1990s and 2000s. The IPNLF has challenged the

findings of the Tyedmers and Parker (2012) study, and Burton (2013b) reports that the International Seafood Sustainability Foundation (ISSF), which

commissioned the study, has acknowledged the relative efficiency of the Maldives’ pole-and-line fishery.

An alternative estimate of FUI can be derived from a cost and earnings survey conducted in August 2011 (Sinan and Rasheed, 2012, unpublished),

reporting on daily fuel costs, the average number of days spent fishing, and reported catch by 51 vessels of varying sizes. Combined with an estimate

of the average cost of fuel in the Maldives, these figures provide an estimate of FUI in 2011, by vessel size. Since the dates of the various estimates

vary, these figures are a rough estimate only, but highlight that FUI is likely significantly lower in the pole-and-line industry (at least in the Maldivian

fishery) than previous studies, suggesting that a new study using more recent data would be beneficial.

Table F-1: Estimated fuel consumption and catch by vessel size

Source: Sinan and Rasheed (2012, unpublished); TNMV (2012) for fuel price estimate; author’s calculations for estimated fuel consumption and FUI

With a fish catch of just over 120,000t in 2012, the entire fish catch of the fisheries could conceivably be taken over by a handful of large purse-seining vessels (Ali, 2013), each of which would only generate direct employment of 20-30 people (Greenpeace, 2013). Previous studies suggesting that a purse seining fleet would be more fuel efficient than pole-and-line fishery do not appear to be representative of the fisheries in the Maldives11, but owing to the larger-scale of these enterprises and the lower labour requirements, the overall financial costs of such an approach might well be lower, at least to the own-ers of the fishing vessel.12 The net profits to the enterprises

operating the vessels would likely be higher, even if the product attracts a lower price due to the loss the premium earned in European markets (Ali, 2013). In the West and Central Pacific Ocean island nations, over 80% of fishing is in the hands of for-eign nations operating purse-seiners and long-liners, and con-sequently, the island nations in this region receive only 6% of

the value of the tuna caught in their waters (Greenpeace, 2012; citing Asian Development Bank, 2003, and Oceanic Fisheries Programme Secretariat of the Pacific Community Noumea, New Caledonia, 2008).

The government’s ban on purse seining and its support to ecological fishery is, therefore, primarily a social and economic policy, which renders traditional pole-and-line fishing economi-cally viable, and permits the fisheries to continue to rely on single or two-boat operations, rather than on larger foreign-owned enterprises. The International Pole & Line Foundation (IPNLF) also highlights the social dimension of its promotion of pole-and-line fishing, and emphasises the high-level of com-munity-engagement in the fishery that such fisheries entail (Ali, 2013; Burton, 2013a).

Whereas a modern purse-seining vessel might cost €25 million (Greenpeace, 2012; citing Cintranaval, unverifiable), the average cost of vessels of 85ft and above, including engine

6 LIVELIHOOD STRATEGIES AND OUTCOMES

<45ft (13.7m) 45-65ft (13.7-19.8m) 65-85ft (19.8-25.9m) >85ft (25.9m)Daily fuel cost (MVR, August 2011) 1,090 4,576 10,921 15,481 Diesel price (MVR per litre, May 2011) 15.65Days spent fishing (avg. 2005-2010) 148 150 145 138 Estimated fuel consumption (liter, 2011) 10,288 43,786 101,255 136,197 Estimated catch (avg. kg/year, 2004-2010) 44,173 137,781 254,102 384,971 Estimated FUI (l/t, 2011) 233 318 398 354

25

LIVELIHOOD STRATEGIES AND OUTCOMES 6


and fishing gear, was reported to be around 5.7 million MVR or around US$375,000 (Sinan and Rasheed, 2012), employ-ing an average of 21 crew members. Such a €25 million in-vestment would thus contribute over 1,800 positions when in-vested in pole-and-line fishery, where the revenue generated is, moreover, distributed equitably among fishermen, who receive a share of the earnings rather than fixed salary.

The immediate effect of the pole-and-line fishery is thus to create an important source of livelihoods, which is of particular social importance in the more remote atolls, and has low barri-ers of entry, even for low-skilled workers.

According to the 2006 Census, 8% of the local population was engaged in fishery in the primary sector, with a further 3% of the population involved in the fish processing industry. Sta-tistics for the individual atolls are not available for the fish pro-cessing industry, but show significant variation with respect to the proportion of fishery workers, which reaches 11% for the atolls (excluding the capital of Malé), and a maximum of 22% in the North Huvadhu atoll. Estimates by the FMA are higher still. In 2006, whereas the Census of that year reported 8,388 fishery workers, the FMA estimate was nearly 67% higher, es-timating a total of 13,980 fishermen, although not all of these may have been actively engaged in fishery at the time (MPND, 1982-2012; FMA, 2013).

Fishing in developing countries may intuitively be conceived of as marginal economic enterprise, frequently bordering on subsistence activity, but fishermen in the Maldives do not con-form to this image. Fishing in the Maldives is a modern indus-try and new fishing vessels are increasingly constructed out of fiberglass, and may measure 85ft or more, with on-board sleeping quarters. The introduction of radio systems sig-nificantly improved fishing efficiency by allowing fishermen to share information about fishing grounds and weather changes, and nowadays vessels are equipped with satellite navigation systems, floodlights and diving equipment. It is not uncommon to see fishermen carrying a BlackBerry or similar gadgets. Fish-ermen are generally literate, and some have held white-collar jobs, before moving into fishery in pursuit of higher earnings (Höhne-Sparborth, 2013a).

Few women are employed in the primary fishery industry, as fishermen are exclusively male. More women are engaged in fish processing, both in cottage industry and industrial pro-cessing facilities. Artisanal fish smoking and drying is a small-scale industry often run as a family business, by relatives of fishermen or as independent operations. Employment figures from the census may underestimate the size of the industry, as these do not include additional subsistence activities. The census found 22% of unemployed females were engaged in subsistence activities, such as production of agricultural crops, processing of fish, or clothes manufacturing.

As of 2012, while there were 79,777 registered foreign workers employed in the Maldives in only 1,103 of these were active in the fisheries, and the possibility of foreign workers be-ing employed as fishermen currently appears unlikely, both due to political reasons, and as the use of the pole-and-line method is a local skill (MPND, 1982-2012; Ali, 2013). Given that the youths of 15-24 represent the largest population group in the country, accounting for 25% of the population, and the propor-tion of the ageing population is small, there appears to be no immediate need to increase reliance on foreign workers in the sector. However, some foreign workers have been employed as boat crew (Mohamed, 2013).

12 A report by Greenpeace (2012) disputes this, citing estimated production costs of US$479-525 per tonne for pole-and-line fish and upwards of

US$900 per tonne for purse-seiners in the Eastern Pacific, but the sources cited by the report for these figures are not scientific sources. Moham-

med (2007) also claims that pole-and-line fishing in the Maldives has a lower production cost than purse seine fishing. However, owing to the higher

labour costs in pole-and-line fishery (which represents the main socio-economic benefit of this type of fishery), it seems unlikely that production

costs would be lower, as affirmed by Ali (2013) and Burton (2013b), who estimated production costs in the Maldives at around US$1,000/t, which

is likely higher than the costs faced by purse seiners.

Figure 13: Employment by Atoll, 2006 (% of total employment)


26

7 SOCIO-ECONOMIC STATUS OF THE FISHERIES


Arable land and agricultural crops in the Maldives are re-stricted to a mere 10% of total land use each (CIA, 2013), and aside from a limited amount of timber, the marine en-vironment therefore represents the main natural resource of the Maldives. The country’s Exclusive Economic Zone (EEZ) amounts to 916,189km2, the vast majority of which com-prises deep ocean waters that are host to the schools of tuna targeted by the fisheries.

Tourism and fishery are the two sectors that extract value from the country’s marine environment, and have at times been in competition with one another. Until 2010, the Mal-dives had a centuries-old but small-size shark fishery, and annual catch averaged around 1,440tpy from 1977-2006 and shark stocks were likely over-exploited (Sinan, 2011). Yet, while the fishery sector was focused on the exploitation of these resources, the tourism industry sought to extract value from the preservation of sharks, and brought in an estimated US$2.3 million in 1992, against a total value of shark exports of US$0.7 million in that same year (Anderson and Ahmed, 1993). Recognition of the economic impor-tance of maintaining the shark population ultimately led to a complete ban on shark fishing in 2010, following financial compensation to the shark fishers (Sinan, 2011).

As both tourism and fishery have expanded in size, the potential for conflicts may have increased, but aside from minor incidents involving bait-fishing too close to the resorts, at present neither the Ministry of Tourism nor individual fish-ermen report any significant concerns (Höhne-Sparborth, 2013a; Jamal, 2013). As the fisheries were for the most part sustainably-operated even before the advent of tourism, few

The role of the fishery in the overall cultural definition of the Maldives should not be underestimated. In a historical sense, the very identity of the Maldives has depended on the ability of the atolls to connect to one another. As an island nation, such connections depended necessarily on seafaring vessels, thus attributing an important role to fishermen in terms of trade, communication, and cultural exchange. Today, fishery is seen as an inseparable part of the Maldivian identity.

In a study of the social linkages of Hawaiian fishermen, re-searchers have studied the networks of fishermen in terms of (1) bonding with likeminded groups and individuals; (2) bridg-ing with somewhat similar but different groups, (3) and linking

restrictions have been needed to be imposed, and most of the conflicts between the sectors resulted from the high de-mand for reef fish products from the tourism industry itself (Shafeeu, 2013). With hundreds of islands left uninhabited, however, there is no immediate shortage of space, and as both sectors recognise the importance of the sustainable management of the country’s fish stocks, the interests of the two sectors are not diametrically opposed.

While the exploitation of natural capital involves a calcu-lated decision between short-term consumption and main-tenance of a long-term balance, skipjack is a highly migra-tory species and therefore requires management not just at a local but also at a regional level. While at the national level there is “increased commitment to a precautionary ap-proach”, concerns remain over the ability of the Indian Ocean Tuna Commission (IOTC) to implement the appropriate poli-cies, owing to the short-term interests of other nations that could boycott such policies (Anderson et al, 2012).

Natural capital is the primary resource that the fisheries derive their economic value from, and is the asset to which all other forms of capital discussed in this section relate. There is also growing evidence that the Maldives is increas-ingly ambitious as regards the preservation of its natural capital, with current discussions including plans to achieve nationwide carbon-neutrality by 2020, the phaseout of hy-drochlorofluorocarbons (HCFCs) and at the 2012 Rio+20 UN Conference on Sustainable Development, the Maldives announced its intention for the entire Republic to become a biosphere reserve within the next seven years (Shafeeu, 2013; Adam, 2013b).

to groups of different hierarchical levels (Barnes-Mauthe et al., 2012). This research found that fishermen generally fre-quently engage in information-sharing, and found that while some fishermen had extensive social networks, the variation in the degree of isolation or social connectedness varied con-siderably between fishermen, and different ethnic groups. In comparison, fishermen in the Maldives form a relatively ho-mogenous group, and interviews revealed few differences in terms of attitudes, priorities and uncertainties (Höhne-Sparborth, 2013b).

Another contrast with the Hawaiian case and its relationship to social capital may be found in the nature of the regulatory

7.1 NATURAL CAPITAL

7.2 SOCIAL CAPITAL

27

SOCIO-ECONOMIC STATUS OF THE FISHERIES 7


framework, designed to maintain catch levels at a sustainable level. In Hawaii, the longline swordfish fishery is managed by a restricted number of permitted fishing days, and a set quota for permitted levels of by-catch of turtles, which results in fish-ing being halted for the remainder of the year when the quota is reached. Such an approach, it has been noted, “depends on how well swordfishers can coordinate to internalize the externalities of their individual swordfishing operations to the entire swordfishery sector” (Arita et al, 2011), ensuring a fair allocation of the quota to each fisherman. In contrast, in the Maldives, the licensing scheme and maintenance of the pole-and-line method acts as the main safeguard of the sector’s sustainability, which therefore does not depend as critically as in the Hawaiian case on coordination between fishermen, al-though linkages between fishermen play a role in self-policing against harmful practices (Höhne-Sparborth, 2013b).

Owing to their high level of income, fishermen in the Mal-dives are also a respected part of the community, and may become island leaders, or marry into other social classes. Consequently, fishermen also also constitute a powerful po-litical force. Fishermen are nominally organised through the Fishermen’s Association, which has chapters in several atolls, but informal networks are probably more important in ensur-ing the representation of fishermen’s interests at the island and national level. At most islands, islands elect or otherwise select senior fishermen to act as their representatives, and the political culture in the Maldives is closely attuned to the

moods of the fishery sector – as is apparent, for instance, from the generous subsidies awarded to the industry, and the establishment of minimum fish prices (Sinan, 2011; Sinan, 2013).

Conversely, the importance of the fishermen and their households as a constituency also hampers the ability to engage in effective policy-making. The developments of an integrated fishery strategy, for instance, are complicated by the unwillingness to address issues such as as the further privatisation of the sector in politically turbulent times. Con-versely, the political atmosphere affects social networks in the fisheries as well. In May 2013, upcoming elections had con-tributed to a degree of social polarisation along party lines, to the extent that individual fishing vessels not uncommonly carry flags identifying their political affiliation.13

The income generated by the fisheries also acts as a so-cial cohesive in times of need, particularly within and between households, although interviewees report that such links were stronger before democratisation. Interviewees suggest that the majority of island improvements were funded by for-eign aid or the central government, but occasional commu-nity projects are financed through donations of islanders, to which fishermen are likely to contribute. Finally, the second most common priority named by fishermen in terms of the allocation of their savings – the pilgrimage to Mecca – also highlights the potential of the fishery to contribute to religious well-being, which is often considered a form of social capital.

13 During a town-hall meeting with a group of fishermen in Kolamaafushi island in Gaafu Alif atoll, even an discussion about seemingly non-political

fishery topics was interrupted through a disturbance between attendees over rival political affiliations, showing that the fisheries are a sensitive and

politicized issue.

Maldivian pole-and-line fishermen in action. This responsible fishing method can support coastal communities and contribute to

resilient tuna stocks.

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The highly-dispersed nature of the population of the Mal-dives results in high costs of delivery of public services, such as health and education. While the Maldives outperforms other countries of a similar income per capita in terms of educational achievement, enrolment in higher-level educa-tion is restricted owing to issues related to access. Whereas gross enrolment in lower secondary level education was ap-proximately 117% in 2011, gross enrolment in higher sec-ondary education was only 21% in the same year, as only 38 out of 225 schools in the country offered this level (WB, 2012). There is only one university in the Maldives, located in Malé, where living costs are significantly higher than in the atolls, increasing the cost of attendance.

There are no statistics available about specific enrolment rates among fishermen, or their families, and at any rate, the effects of recent increases in the income of fishermen may be too recent to be reflected in educational statistics. How-ever, literacy rates do not seem to vary significantly with the proportion of fishermen in atolls. In the top 10 fishing atolls (measured as the proportion of employed workers engaged in fishery), the 2006 literacy rate averaged 96.2%, against 95.8% in the bottom 10 atolls (2006 census), excluding Malé. In comparison, in Tanzania 32% of fishermen inter-viewed were found to have received no formal education, suggesting that the Maldives may compare well on this ba-sis with other developing countries (Igulu, 2013). During in-terviews, some fishermen indicated that they had previously held alternative employment including white-collar jobs in such sectors as the civil service, which they abandoned in favour of the higher incomes available in the fishery (Höhne-Sparborth, 2013a).

During interviews education was consistently named as one of the primary priorities to which fishermen intended to allocate their savings. Fishermen and their families report that they wished for an easier life for their children, and edu-cation is seen as the means by which to achieve this, but it is recognised that such education comes at a high financial cost.

As noted in a World Bank report (2012), the educational system is not well-geared to the demands of the economy and is exacerbated by a bias against vocational jobs, which are seen as inferior in comparison to white-collar jobs. Given the size of the economy, there is a low demand for spe-cialists and a high demand for generalists, and specialist courses are not offered by the university. These may be un-avoidable constraints, but as a result, it is not immediately apparent which jobs educated workers could aspire to that would offer similar benefits as the fishery. Hence, although the fisheries may generate sufficient household income to support the attainment of higher educational diplomas, the skills thus obtained may end up being underutilised if the fishery remains the most immediately appealing sector in a financial sense.

On the other hand, productivity in the fishery sector can also be viewed as being affected by education, and “fishing need not be viewed as a job which is just for the unskilled or for the non-educated” (Mohamed, 2013). A modern fishery requires skilled workers, especially as regards fishing, boat management, and an understanding of the basic ecological patterns driving fish catch. Recently, the Minister of Educa-tion has indicated that vocational courses in agriculture and

7.3 HUMAN CAPITAL

The nets are prepared and bright lights are used to attract bait

fish to the sea’s surface.

A Maldivian fisherman in snorkel gear prepares to dive over the

side of the boat, to collect bait fish.

29



fisheries is one area that the ministry intends to promote, al-though no specific plans have been announced (Ministry of Education, 2013). The government is also promoting the di-versification of the sector, for instance through the introduc-tion of mariculture and aquaculture, which will require skilled and educated personnel to succeed (Mohamed, 2013).

Human capital in the Maldives, and among the house-holds of fishermen, is also impacted by the very fishermen’s lifestyles. Fishermen generally spend long hours at sea, and in the case of the yellowfin fishery, may be away for up to two weeks, which affects the management of households,

Ships are owned either by fishermen, their relatives, or in-dependent owners, but it is rare for more than two vessels to be owned by a single person (Sinan, 2013). Vessels and fishing gear may cost US$150,000 to US$500,000 and are typically financed from personal savings. Commercial loans are commonly used to finance the engine, for which the ves-sel is used as collateral. Other means of acquiring a vessel include development loans, credit provided by purchasing companies, and leasing (Linton and Shareef, 2011). Inter-est rates on commercial loans frequently exceed 10%, and a penalty system is in place if payments are not completed on time (own interviews).15 Commercial loans issued by the Bank of the Maldives are pre-conditioned on the borrower concluding an insurance agreement.16

In 2011, an average of 841 fishing vessels were engaged in fishing activities per month, of which 94% were mecha-nised, compared to 1,685 vessels in 1995, of which 87% were mechanised (MPND). While a number of these vessels may have been taken out of service, there appears large sur-plus capacity, consisting of vessels deemed obsolete due to

for instance as regards the upbringing of children. Fishery, while not generally described as a high-risk occupation, nonetheless carries greater risks than many shore-based jobs, and loss of life or injury is of particular concern due to the lack of life or personal accident insurance.14 Since fishery is also physically demanding, the income of fisher-men is threatened by disease, disability, and even mere age (interview results). Fish processing has traditionally been the natural means of alternative employment, but as this sector is now struggling, fishermen’s households are vulnerable to health-related income shocks.

size, age or cost of operation. Fishing vessels have rapidly increased in size over the last years. Sinan and Rasheed (2012, unpublished) report that whereas in 2004, there were only 16 vessels of 85ft or more, by the end of 2010 this figure had increased nearly 600% to 122. The same source reports that larger vessels are generally assumed to be more efficient, covering a larger area and able to carry more bait-fish, reducing the time per unit spent on travelling to-and-fro bait fishing grounds and fish purchasers.

Large capital investments have also been made by pro-cessors. Kooddoo owns seven collection and one mother vessels, and a cold storage and freezing complex, and is planning a similar complex in the southern atolls. Horizon Fisheries owns five collection and three mother vessels, a 3,000mt cold storage complex, and 220mt freezing facili-ties that were recently completed, as well as canning facili-ties and a newly-completed super-freezing installation. Lin-ton and Shareef (2011) estimate that the capital investment required for such complexes may have exceeded US$20 million, which in the case of Kooddoo and Felivaru were

7.4 PHYSICAL CAPITAL

14 During a town-hall meeting, fishermen commented that safety on vessels could be improved.

15 Some villagers report that owners that invested in their new boats prior to the decline in fish catch since 2007 experienced difficulties repaying their

loans, and that missed payments led to a rise in the interest rate to 15%. At this higher rate, some owners have struggled to repay loans, leading in at

least one reported case (that could not be verified directly) to imprisonment. A scheme to allow for such toxic loans to be re-structured or re-negotiated

does not appear to be in place.

16 In one interview, one fisherman reported having ceased payments to the insurance scheme after failing to obtain a pay-out for damages, and that the

scheme is not strictly enforced. During a town-hall meeting with a larger group of fishermen, however, few comments were received with respect to the

functioning of these insurance schemes.

30



financed using funds from a World Bank loan. The same authors estimate that the smaller enterprises exporting fresh fish have a typical start-up capital expenditure of US$10,000 – US$100,000.17

Foreign investment in the 1970s, combined with World Bank-financed credit schemes, and the privatisation of the fisheries have each contributed positively to the accumula-tion of physical capital in the fisheries. Government subsi-dies may also have played a role in this, by changing the

Anecdotal evidence gathered during interviews suggests that fishermen are among the highest paid workers in the economy. Fishermen report that they earn more than gov-ernment employees, and among fishermen that have previ-ously held other employment, higher income is cited as the primary reason for the change into fishery (Interviews, 2013). Fishermen are not salaried employees, and instead share in the revenue generated by the crew as whole. Consequently, income of fishermen varies according to fish catch (itself a function of fishing effort), and the average price of fish.

In 2006, the fishery sector contributed an estimated US$94.6 million to GDP in 2012 constant dollar terms. Of this amount, US$46.9 million was accounted for by the pri-mary fishing industry, with the remainder accounted for by the fish processing sector. The number of fishery workers was estimated at 8,388 in the census of that year, resulting in a contribution to GDP per fishery worker of US$5,587. Average revenue generated per fisherman can also be de-

expected returns of investments in assets such as fishing vessels.18 The physical capital provides a sustainable in-come base and provides a means of livelihoods. In addi-tion, owing to the large excess capacity in the industry and the presence of insurance schemes (at least in rudimentary form), the fisheries appear relatively resistant to threats such as disaster and accidental damage and thereby contribute positively to reducing the vulnerability of the population to loss of income.

rived from FMA estimates of fish catch and the number of fishermen19, combined with data on historical prices.20 On this basis, revenue generated per fisherman is estimated at US$4,640 in 2006, of which approximately half is assumed to represent the income of fishermen, as explained below. In comparison, findings from a 2006 survey suggest that the average income in the tourism sector was approximately US$384 per month (Ministry of Tourism).

From 2006 to 2011, fish catch decreased by 34%, along with a 22% decline in the number of fisherman, and a 193% increase in the average dollar price of fish, resulting in an estimate of output per fisherman of US$11,369 in 2011. In 2012, the dollar fish price increased a further 43% and al-though statistics are not yet available at the time of writing, fish catch is also believed to have increased, contributing to a 94.1% increase in exports in 2012 (UN Comtrade). It thus appears likely that the output per fisherman increased to somewhere in the range of US$22,000, using the FMA

7.5 FINANCIAL CAPITAL

17 Despite privatisation, fish processing companies are generally held privately by a limited number of investors, rather than through public ownership.

The tourism sector has experimented with public ownership of a national investment company, which initially achieved some success (Jamal, 2013),

but the model does not appear to have been introduced to the fisheries. Given the apparent abundance of capital among fishermen, their investment

in the process of value addition could remedy cash-flow issues higher-up in the value chain, and could re-structure financial interests to facilitate the re-

negotiation of fish prices. However, such an approach seems unlikely in the context of an underdeveloped financial sector and the low mobility of capital

in the economy (poverty), and the lack of a clear strategy with respect to the ownership, privatisation, and direction of the fish processing industry.

18 Sinan (2013) reports that the FMA also considered promoting subsidies in the form of physical assets, such as on-board ice plants, rather than fuel

subsidies, as were adopted in December 2012.

19 The FMA estimate of fishermen is significantly higher than the 2006 estimate of fishermen. In 2006, the FMA reported 13,980 fishermen, against the

census estimate of 8,388 workers. The use of the FMA figure thus results in a more conservative estimate of output per fisherman.

20 Data on historical prices based on the average price of fish paid by Horizon Fisheries, as a weighted average of skipjack and yellowfin purchases.

31



estimate for the number of fishermen. Taking into account that not all reported fishermen may be actively engaged in fishery, the figure for active fishermen only could be as high as US$29,000-37,000.21

Most commonly, the boat owner takes a 50% share of the revenue to cover capital and operating costs and prof-it, with the remainder of the revenue shared among crew members. On the basis of the calculation above, the aver-age income of fishermen in 2012 is estimated at US$11,000 to US$18,500 per fisherman. During interviews, few inter-viewees could confidently self-report their average income, as incomes fluctuate from month-to-month, while generally having increased for several years. Instead, fishermen re-ported incomes of up to 40,000MVR or US$2,560 in good months, while several vessel owners reported paying fisher-men a minimum income of at least 10,000MVR or US$640 in a bad month, suggesting some lower and upper limits for the estimated income of fishermen.22 In comparison,

artisanal fishermen in Tanzania were estimated to have an income of around US$3-31 per fishing day, with an average of around US$12, depending on the catch of the day (Igulu, 2013), suggesting that Maldivian fishermen are considerably better-off in this economic sense than their Tanzanian coun-terparts.

The saving rate among fishermen fluctuates according to income and the Maldives faces high costs of living owing to the cost of imported goods, but in 2013 some fishermen re-ported that they are able to save more than half of their earn-ings (Interviews, 2013). Fishermen most commonly name their children’s education and savings for the pilgrimage to Mecca as the primary goals towards which these funds are saved. Some income is also re-invested, with younger fish-ermen expressing the desire to one day own their own ves-sel, and private funds are a common source of finance for the acquisition of new or larger fishing vessels (Linton and Shareef, 2011). There is little evidence of an upward spread

21 The lower figure is based on the 2006 census figure of 8,388 fishery workers. The higher figure is based on the observation that in 2006, the number

of fishery workers as estimated by the census was 40% lower than the FMA estimate, and the application of this same percentage to FMA’s estimate of

10,971 fishermen in 2011.

22 It should be noted that an earlier and unpublished survey conducted by the FMA in August 2011 found lower reported earnings. The survey found

that average earnings varied according to the size of the vessel, with annual salaries ranging from 34,879MVR (US$2,458) per year for crew members

of boats of 45-65 feet, to 72,608MVR (US$5,095) for crew members of boats of 65-85 feet. Larger vessels face a different economy than smaller ones,

and may catch more fish per trip, but go on fewer fishing trips per year owing to higher operating costs. The authors of the survey warn that the data is

based on a only a single month of data, during a time when fishermen were pre-occupied with government subsidies, and are likely to have over-reported

expenditure and under-reported revenue owing. Consequently, the survey found that on average vessels of any size were economically unprofitable when

including opportunity costs, which seems unlikely. While these findings should therefore not be interpreted as being indicative of actual incomes, it is likely

that income indeed varies according to the type of vessel.

Source: Fisheries Management Agency, Horizon Fisheries, author’s calculations

Figure 14. Estimated revenue and income per fisherman, 2003-2012e (US$)

32



of capital along the value chain, and fishermen are not gen-erally invested in the process of value addition, other than through the artisanal cottage industry (Höhne-Sparborth, 2013a). However, a high saving rate may provide an incen-tive to fishermen for diversification of their activities, creating new opportunities for income-generation and reducing the dependence of the local population on the performance of a single sector (Mohamed, 2013).

Moving upwards in the value chain, earnings seem to di-minish. Fish processors in the artisanal industry may pro-cess 500-700kg per day, but face limited access to fish, as fishermen prefer to sell to the larger companies that can supply them with fuel and ice. Some fish processors report having to pay a premium to obtain the fish, or being restrict-ed to the purchase of small fish rejected by the companies (Interviews, 2013). In a 2006 analysis cited by Linton and

Shareef (2011), smoked Maldivian fish was reported to have the lowest margin of all processing sectors, barely breaking even. Interview results with fish processors suggest that in previous years the situation may not have been as dire as that, and fish processors report their past incomes rang-ing from 3,700 to 27,000 per month. Incomes fluctuated according to seasonal variations or access to fish and pro-cessors relied on loans from local shops to overcome short-term shortfalls in income.

However, while the rising price of fish has increased the overall benefits generated by the fishery sector, the high price and limited availability of raw material has worsened conditions in the cottage industry. In May 2013, proces-sors reported selling fish paste at around 80-90MVR per kilo (Höhne-Sparborth, 2013b), but although these prices were rising, a raw material utilisation rate of 18% (Linton and Shareef, 2011) would imply a break-even fish price of 14-16MVR per kilo. Actual market prices of raw fish, however, had increased to 22.50MVR in May 2013. Processors in two villages that were sampled report that many artisanal pro-cessors have left the industry or are trying to supplement their income with alternative employment, working in shops or agriculture. Lack of access to finance or credit schemes is reported as an obstacle to such transitions (Interviews, 2013) and no government strategy appears in place to ei-ther support this sector or the creation of alternative liveli-hoods for fish processors forced out-of-business.

The same 2006 analysis cited previously (Linton and Sha-reef, 2011), found the production of fresh yellowfin to have the highest margins, followed by frozen skipjack and canned tuna, and feedback from the private sector suggests that this situation remains unchanged (Ali, 2013). The export of fresh yellowfin, however, is hampered by access to appro-priate air transport facilities so that companies further re-moved from the capital focus on canned and frozen tuna. Kooddoo primarily focuses on the export of frozen fish to Thailand, and this appears to be a profitable enterprise, with the company planning to expand processing facilities to the southern atolls to expand capacity and access to fish. Ho-rizon Fisheries is the largest producer of canned tuna, but its facilities were completed in 2006 at a time after which a declining fish catch coincided with rising prices, resulting in a low capacity utilisation and high fixed costs per unit of fish produced.

In the retail industry selling imported tuna from the Mal-dives, margins on pole-and-line tuna appear low, although

In 2013 some fishermen reported being able to save more

than half their earnings – their children’s education is cited as a

priority for savings.

33



these vary by country. In the United Kingdom the margin is limited to approximately 5% (Greenpeace, 2012). Sains-bury’s reports that the product does not command a pre-mium, but is, instead, supported by the company’s com-mitment to ecologically-responsible business and branding considerations (Dingwall, 2013).23 The strategy appears to be at least partially successful, with the commitment by re-tailers now monitored by independent groups, for instance through the publication of a tuna league table (Greenpeace, 2011).

As the product is marketed at low margins in markets such as the United Kingdom, it appears unlikely that retail-ers would be willing to absorb the increased cost associated with a European import duty resulting from the graduation of LDC status. It is equally unlikely that this increase in cost would be passed onto end-use consumers, as the price is close to the limit consumers would be willing to pay for the product (Dingwall, 2013). Consequently, the cost of the im-port duty must be borne by processors and the fishermen in the Maldivian supply chain, which will affect the profit-

ability throughout the value chain, with the canning industry at particular risk. At present, duty-free imports into the Eu-ropean Union from the Maldives provide a cost-advantage compared to fish processed and canned in Thailand, which are charged with a 24% import duty. Once a similar (albeit slightly lower) duty is imposed on products imported directly from the Maldives, this advantage is likely to disappear. This will in turn likely shift processing activity away from the Mal-dives to Thailand, unless costs can be significantly reduced (Burton, 2013b).

Increasing capacity utilisation to reduce fixed costs or re-ducing the price of fish may thus be the only viable options for the industry. There appears to be a broad awareness among government, foreign importers and the processing companies of the challenged posed by graduation from LDC status and of the possibility that prices of fish may need to be lowered but awareness of these challenges does not ap-pear to extend to the level of fishermen, and the matter is currently not actively communicated by the government (Ali, 2013; Shafeeu, 2013).

21 During a town-hall meeting with fishermen, fishermen enquired into the price their product fetches in the UK market and it was a matter of some surprise

to them to find out that prices are similar to local retail prices and are essentially subsidised by the UK retail industry.

The fishermen land the tuna they catch by hand. The market’s low margins mean that the cost of import duty must be borne by

processors and the fishermen.

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8 DISCUSSION AND RECOMMENDATIONS


The Maldives is in the ambiguous position of having one of the most richly-endowed marine environments in the world, while at the same time facing greater natural risks than nearly any other country. The Maldives, as a small part of a larger oce-

anic ecosystem, is particularly exposed to threats such as

over-fishing and over-exploitation. The fishery in the Maldives is based on an Indian Ocean stock that is considered highly migratory and straddling (Adam, 2013b). Rising demand of tuna has pushed up prices, but also skews the incentive structure for the fisheries elsewhere in the Indian Ocean, adding ever greater importance to a precautionary form of management of the fish population. Meanwhile, the Maldives potentially face serious threats from climate change, not only from the worst-case scenario of rising sea levels threatening the existence of the atolls, but also from changing oceanic conditions including acidification and rising surface tempera-tures.

The fisheries in the Maldives have, throughout their exis-tence, been based on a sustainable model that primarily relies on pole-and-line fishing. Over the last decades, the pole-

and-line model has evolved from a traditional practice to

a legally protected industry, through the introduction of a license system and, more recently, the completion of MSC certification and full membership of the IOTC. With growing consumer awareness of ecologically-responsible tuna, the Maldives has been heralded for its adoption and support of best-practices in fishery, and now forms a model promoted by

As the majority of fish products are exported, the economy is highly exposed to changes in global trends in demand and prices, to changes in the exchange rate, and shipping costs. Over the past years, prices in the international market have increased dramatically. Whereas in 2009 purse seined skipjack traded in the range of US$1,000-1,500/t, in 2012 and 2013 prices ranged between US$2,000-2,500/t, while pole-and-line fish has maintained a steady premium (Burton, 2013b). This increase in prices has largely been passed on to fishermen, who have seen their incomes soar. On the oth-er hand, a decline in the Bangkok market would put this

newly-acquired economic wealth at risk. While fishermen presently save a significant portion of their income, through banks or more informal means, a sustained drop in prices would be harshly felt. However, the risk of a sustained drop

environmental interest groups, and keenly observed by other island and oceanic states.

But, as this report has sought to emphasize, the govern-ment’s support to the pole-and-line method of fishing is as much a social and economic policy as an ecological one. Poli-cies such as the ban of shark fishing may have been put on the agenda through environmental pressure groups, but their pas-

sage has depended on recognition of the economic value

in maintaining the marine environment. Similarly, MSC certi-fication and IOTC membership have been driven by the need to maintain access to EU markets – access that is now threatened by the impending loss of LDC status and imposition of import duties on fish products from the Maldives.

For the population of the Maldives, the fisheries provide a

sustainable, and accessible means of a generating a live-

lihood. Whereas the entire fish catch of the Maldives could easily be taken over by a few large purse-seining vessels, the maintenance of the pole-and-line fishery and the exclusion of foreign operators have maintained the industry’s organisation into small, single vessel or two-vessel operations. At present, fishermen are among some of the most highly paid workers in the economy, and their income carries over indirectly to the rest of the economy, through consumer spending, re-invest-ment and the promotion of higher educational goals for their offspring. The social role of the fisheries is of particular im-

portance in the remote atolls, where fewer economic alter-natives are currently available.

in prices in the international market appears unlikely owing to increasing demand and supply affected by catch control measures, and the premium received for Maldivian fish pres-ently remains generous.

The issue is especially urgent in the context of the imposi-tion of European import duties. Prices of tuna in the Maldiv-ian market appear to be at the natural limit of what consum-ers are willing to pay, and to maintain competitiveness in

the EU market, production costs in the processing sec-

tor will need to drop significantly for canning not to be

displaced to Thailand. At present, it is unclear how such a drop in prices would be distributed throughout the value chain. Companies such as Horizon Fisheries and Felivaru presently operate at low capacity and a high average cost of production, and reducing their cost of operation will require

8.1 BENEFITS

8.2 CHALLENGES

35

DISCUSSION AND RECOMMENDATIONS 8


either raising production, or decreasing the cost of the raw materials.

Owing to the high dependence of the Maldives on its fishery exports, the effects of a decline in exports to the European market could be significant. As the Minister for Economic Development states, “any negative drawbacks

in any of our major export markets will mean ripple ef-

fects throughout the economy, the hardest hit being the local fishermen as this would mean loss of job opportunities and sharp falls in income to primary fishermen who sell their fish to processors” (Mohamed, 2013). Given the large por-tion of the electorate that fishermen and their dependents represent, any decrease in prices or income is also politically sensitive.

Involving fishermen in the process of value addition could be one solution, but is likely too ambitious in the present context. Paradoxically, then, although the high degree of political influence of the fisheries has helped to bring about the present model of the fisheries, the politicisation of

the fisheries threatens to hamper the development and implementation of sound developmental policy. The recent passage of US$6.5 million in fuel subsidies, for instance, does not seem to cater to an urgent economic need, as since 2006 and 2007, the rapid rise in the income of fisher-men has coincided with a fall in the price of fuel. Instead, policies such as these appear motivated by a reluctance to upset the expectations of fishermen in a crucial election year. Inadvertently, however, the policy may also displace other social priorities, given the limited funds available to the central government.

On the medium to long term, a clear strategy for the

future direction and development of the fisheries is

currently lacking, but urgently needed, if the industry is to continue to prosper. First, capacity within the sector is poorly structured, with much latent capacity in the north-ern atolls, combined with limited processing capacity in the south, where most of the fish catch is currently concentrat-ed. Second, privatisation of the sector remains incomplete, and despite earlier commitments to further sale of govern-ment assets in the fisheries, the future of the government companies remains unclear, complicated by established po-litical and financial interests.

A third point, and a more fundamental one at that, is the position of the fisheries in the economy as a whole. While large revenues are presently generated, the majority of these funds seem to remain confined to the sector itself. Govern-ment revenue from the fisheries remains minimal, and the sector appears to be a net recipient of government funds. In the context of the fisheries as a social policy this is perhaps not inappropriate, but the limited revenue extracted from

the sector does undermine the ability of the central gov-

ernment to engage in re-distributive and poverty-allevi-

ating policies. The rising price of fish vividly illustrates that the benefits from the fisheries are at times lopsided, since increased revenue for the fishermen has been coupled with consumer prices of fish products more than doubling over the span of ten years.

For instance, while the fisheries are a welcome source of income to many otherwise isolated communities the sec-tor is not accessible to all – owing to gender issues, health constraints, and age. The artisanal fish processing sector is an example of a related industry in which many that are excluded from sea-faring fishery find their livelihoods, but the rising price of raw materials and competition from the large purchasing

Over the last decades the pole-and-line model has evolved from a traditional practice to a legally protected industry.

36

8 DISCUSSION AND RECOMMENDATIONS


companies has threatens the existence of this industry. The

transition of workers in the cottage industry is presently

poorly supported, owing to the lack of alternative employment opportunities, vocational training programmes, or government credit schemes. In cases such as these, the limited revenue extracted by the government from the fisheries obstructs the ability to implement re-distributive policies that could facilitate the smooth transition of sector such as these.

More generally, the prospects of growth in the fishery are

limited, as fish catch has a natural limit that cannot be infinitely stretched, and Maldivian fish catch is believed to be close to the maximum, and additional gains cannot be achieved by in-creasing fishing efforts (Adam, 2013b). In the last thirty years, tourism and fishery have contributed greatly to the economic prosperity of the country, but the fishing industry may now be approaching maturity. Consequently, a new developmental plan is needed, to identify those sectors that have the most po-

On the whole, the net socio-economic impact of the fisheries is clearly positive, and the challenges outlined in this discussion primarily relate to the potential of the sector not being fully utilised.

The following recommendations could contribute to maxi-mising the social and economic benefits of the fisheries:

• Development of a clear plan for the further privatisa-tion of the fishery sector, outlining the direction of com-panies such as Kooddoo, MIFCO and Felivaru, identifying the challenges faced by the current private enterprises in the industry, supporting a healthier cash-flow within the sector to improve capacity utilisation, and the opportunities for re-development of the fisheries in the northern atolls.

• Development and integration of the financial sec-tor, including encouraging the mobility of capital within the economy, support to commercial and government credit schemes, the re-evaluation of toxic loans in the fishery sec-tor, and improved coordination between the Ministries of Finance, Tourism and Fisheries and Agriculture.

• Diversification of products and markets, to help allevi-ate the impact of the loss of LDC status, through promotion of the premium nature of Maldivian tuna in new markets and

tential to contribute to future growth, determine any obstacles to be overcome, and the means by which the capital base in sectors such as tourism and fishery can contribute to the de-velopment of such sectors.

The issue of education is a particularly noteworthy example of this. While fishermen report that their children’s education is a primary priority to them, the promise of a white-collar job alone may not prove sufficient to retain such newly-trained workers, as long as there is such a discrepancy in income be-tween the fisheries and other sectors. The Maldives it seems thus has two options: either to create new avenues of finan-

cially-attractive employment to provide realistic opportuni-ties for such educated workers (and to find alternative workers at home and abroad to fill the gaps in the fisheries), or to risk having the perceived returns to education diminished, and as-sociated effects such as the under-utilisation of skills, a brain-drain out of the country.

the development of new products such as the development of the grouper fish industry, as well as support to invest-ments in value-addition.

• Identification of vulnerable groups adversely affected by the rise in fish prices, possibly leading to support for a transitional scheme for struggling workers in the fish pro-cessing sector, and including consideration of the impact of rising fish prices on the nutritional status of the population, particularly among the poorest stratum.

• Re-consideration of the role of foreign investment, particularly as regards the potential for transfer of knowl-edge and assistance to potential areas of growth, such as aquaculture.

• Creation of educational and career opportunities, in order to utilise the potential for growth in human capital, generated by the interest of fishing families in investing in their children’s education, including through the develop-ment of training courses geared towards vocational skills, in fishery and other sectors.

• Further research into the socio-economic status in the fisheries, including implementing a larger survey into

8.3 RECOMMENDATIONS

37

DISCUSSION AND RECOMMENDATIONS 8


the incomes of fishermen, their level of educational achieve-ment, their past forms of employment, any additional forms of employment that they or their dependents may hold, sav-ing rates, levels of (re-)investment, and costs of living.

Some of these policies are clearly long-term goals, and can neither be developed nor implemented overnight. Further research will also be required to identify the specific bottle-necks and needed investments in the various sectors and

services within the economy. However, as the fishery sector is growing increasingly mature, failure to consider the future development of the sector and the transition of the economy to higher-value products and services could lead to even-tual stagnation.

That said, it appears unlikely that any significant progress on these policies can be made until the political situation in the Maldives has become more settled, following the elections in September 2013.

Fishermen in snorkel gear work together to collect bait fish. The benefit of excluding large-scale fishing has been to allow for a

community-based model of fishing in which revenue is divided evenly among those involved.

38

9 CONCLUSION


While the ecological benefits of the pole-and-line tuna fish-eries in the Maldives have been widely publicised, the sig-nificance of these fisheries as a social model has perhaps been under-emphasized. This report has illustrated that government policies that have helped to shape the present form of the fisheries are influenced by economic consider-ations, and have had a direct impact on the socio-economic status of the population.

The primary benefit of maintaining a licensed fishery that excludes large-scale fishing has been to allow for a com-munity-based model of fishing, in which the revenue in the sector is divided relatively evenly among those involved in the sector, and over a large and geographically-dispersed part of the population. Negatives include the high degree of exposure to trends in foreign demand and prices, the high cost of fish to domestic consumers, and the possibility that the high returns to labour in the fishery sector may reduce

the returns to investments in education. Socio-economic benefits could be further improved through the develop-ment of a clear long-term strategy to address issues such as privatisation, diversification, and re-development of the north.

In sum, the Maldivian model may be deemed a successful one, and appears favourably to fisheries in countries such as Tanzania, where tuna fishery is already a major contribu-tor to exports and local incomes, but remains vastly under-developed (Igulu, 2013). However, the Maldivian model is also highly context-specific, having benefited from a long established practice of pole-and-line fishery and political will strengthened by the large portion of the population en-gaged in fishery. While the model could therefore provide useful lessons to other island states, a degree of caution should be exercised with respect to the ability to replicate the Maldivian model.

9 CONCLUSION

The Maldivian model may be deemed a successful one and could provide useful lessons to other island states.

40

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The reliance on pole-and-line fishing in the Maldives means

that the challenges of transplanting its model ought not to be

underestimated.

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